Correlation Between Costco Wholesale and Metalero Mining

Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Metalero Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Costco Wholesale and Metalero Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Costco Wholesale Corp and Metalero Mining Corp, you can compare the effects of market volatilities on Costco Wholesale and Metalero Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Costco Wholesale with a short position of Metalero Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Metalero Mining.

Diversification Opportunities for Costco Wholesale and Metalero Mining

-0.37

Correlation Coefficient

Costco Wholesale  Metalero Mining

Very good diversification

The 3 months correlation between Costco and Metalero is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Metalero Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalero Mining Corp and Costco Wholesale is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Costco Wholesale Corp are associated (or correlated) with Metalero Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalero Mining Corp has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Metalero Mining go up and down completely randomly.

Pair Corralation between Costco Wholesale and Metalero Mining

Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.36 times more return on investment than Metalero Mining. However, Costco Wholesale Corp is 2.81 times less risky than Metalero Mining. It trades about 0.13 of its potential returns per unit of risk. Metalero Mining Corp is currently generating about 0.01 per unit of risk. If you would invest  4,218  in Costco Wholesale Corp on September 14, 2024 and sell it today you would earn a total of  363.00  from holding Costco Wholesale Corp or generate 8.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Costco Wholesale Corp  vs.  Metalero Mining Corp

Costco Wholesale Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Costco Wholesale may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Metalero Mining Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metalero Mining Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Metalero Mining is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Costco Wholesale and Metalero Mining

The main advantage of trading using opposite Costco Wholesale and Metalero Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Metalero Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Metalero Mining will offset losses from the drop in Metalero Mining's long position.

The idea behind Costco Wholesale Corp and Metalero Mining Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.